SoftBank buys Vision Fund's stake in Arm at valuation of $64 billion

SoftBank Group Corp has acquired the 25 per cent stake in Arm Ltd it does not directly own from its Vision Fund unit in a deal that values the chip designer at $64 billion, according to people familiar with the matter.

Details of the transaction will be unveiled on Monday when Arm makes public the filing for its blockbuster stock market launch, the sources said, requesting anonymity as these discussions are confidential.

SoftBank is now expected to sell fewer Arm shares in the initial public offering (IPO) and would likely be retaining a stake of as much as 90 per cent in the company, according to the sources, adding that Arm's capital raising from the IPO would be less than the range of $8 billion to $10 billion it was earlier planning.

SoftBank is currently in talks to list Arm at a valuation of $60 billion to $70 billion in the IPO, which is expected to happen in September, Reuters has previously reported. SoftBank, which took Arm private for $32 billion in 2016, sold a 25 per cent stake in the company to Vision Fund 1 (VF1) for $8 billion in 2017.

The deal removes a potential overhang for Arm's stock following the IPO, because VF1 had initially planned to cash out its stake in the stock market over time following the listing, while SoftBank has indicated it will remain a long-term strategic investor.

Reuters was first to report earlier in August that SoftBank was in talks to buy the stake from the Vision Fund. The Wall Street Journal reported the financial terms of the deal earlier on Friday.

The deal also delivers a major victory for VF1's biggest investors, including Saudi Arabia's Public Investment Fund and Abu Dhabi's Mubadala. They nursed losses after many of SoftBank's bets on startups such as workspace provider WeWork Inc and ride-sharing firm Didi Global soured.

Arm's plans to go public come as the US IPO market shows early signs of a recovery after a barren spell that lasted a year and a half. Grocery delivery service Instacart and marketing automation firm Klaviyo Inc are also expected to go public in New York in September, the sources said.